Money, money, money.. is this the best way to motivate a salesperson?
04 June 2020
Posted by: Andrew Hough
Thursday 4 June 2020
In this article, the second in a series busting the myths of sales leadership, Andrew Hough, chief executive of the Association of Professional Sales (APS), challenges the common perception that salespeople are simply driven by how much they earn.
Historically, salespeople have been very well paid. The rationale for this has been that they are “coin-operated”, as the joke goes, and that to motivate them you need to give them the chance to earn the material things in life: a flashier watch, a faster car or a luxury break.
As a self-confessed traditionalist in sales, I admit to buying nice watches, expensive cars, and having great holidays. I did what others around me did. Was that wrong? No. It was not hurting anyone. I was simply swept up in the mood of the times.
But there is a danger if we sales leaders persist in doing things the way they were done in our younger days. This is a point I have already raised in the first of my articles on addictive leadership. Times change. Yesterday’s solutions gradually cease to be true or relevant. They become myths that have outlived their usefulness.
So is it still true, if it ever was, that salespeople are mainly interested in money? We act as though they are. Many salespeople are still very well paid, and as they are revenue-generators for their companies, fair enough. Most companies have a different pay structure for salespeople compared to other professionals. Few sellers receive a flat-rate salary; for most, pay and bonuses are linked to the value and volume of deals done. The more they sell, the more they get paid. Like dogs in the yard, salespeople are thrown a few juicy chops and left to get on with their work.
Many are not happy with this state of affairs, as the Association of Professional Sales has been warning for some time. Money is far from being the only motivator, and in some studies is not even the prime one. The APS 2020 Sellers’ Survey showed that financial earnings and reward was only the third-rated concern for sellers.
In our opinion, even that finding may be skewed by the responses of older cohorts of salespeople. Because whether you look at the APS survey or other studies by EY, Deloitte or Gallup, the findings are similar: the millennials who now make up the majority of our sales teams are just as interested in personal development, growth in their careers, and in positive and inspiring experiences in the workplace, as they are in watches, cars or package holidays.
And it’s far from clear whether linking sellers’ rewards solely to the revenue they make for their firms is actually benefiting those firms.
Repeated mis-selling scandals have shown again and again that there are dangers for customers in a system of reward where sellers are paid to sell more, and a risk of reputational damage for the companies involved.
The early weeks of the Covid-19 crisis brought this into sharp focus. Selling went out of the window: nobody wanted to be sold to. Instead the best and brightest sellers reached out to customers on a human level and asked how they were, how their marketplace had changed, what their new challenges were, and what they needed to stay afloat. This didn’t lead to a sale, but it did lead to trust, and trust is 52% of the battle in making a future sale.
These sellers adapted quickly to a different way of working. Without face-to-face meetings their productivity actually went up, because without spending time travelling to their customers, they could arrange more conversations with more clients to find out how they and their businesses were doing.
This behaviour was clearly beneficial to their own company’s chances of emerging strongly from the lockdown. If these sellers had instead kept on making standard sales calls to clients whose organisations were in turmoil, and whose needs were changing rapidly, the likelihood is they would have done more harm than good.
The question for a sales leader is, how do you reward behaviour that is professional and advantageous to your company? You can’t do it on the basis of quotas, targets or revenue.
This is where older sales leaders - and very few sales leaders with significant decision-making scope are under the age of 45 - will need to think differently. The risk is that the era we inhabited when we were young will persuade us to remain tied to assumptions that are no longer valid.
The majority of sales leaders today look at compensation through the same lens they have always used. But applying that vision to sellers fails to reward their creativity, or their ability to build trust.
And that, the Association of Professional Sales would argue, is the issue with the way sales ecosystems are today. Addictive leadership drives towards incentives by fiscal rewards and bonuses, but offers no other reward.
The pernicious practice of over-quota-ing, meanwhile, has weakened the power of financial incentives. Quotas are now manipulated in such a way that less than 70% of sellers make their number - discouraging for anyone, let alone a generation that grew up on computer gaming.
The view of the APS is that sellers want to be fairly rewarded for the revenues they generate on behalf of their employers, and they want a fair and realistic goal by which they are compensated. In addition, millennials and generation Z want other kinds of rewards: help with professional development, and recognition for their achievements. They want rewards in a positive workplace experience, and the sense of contributing to a worthy purpose like increasing the success of their customers. In the APS 2020 sellers survey, the top priority and concern for sellers was “work-life” balance, followed by goal attainment.
So how can sales leaders look at ways to change the reward structure for their sellers? For a start, they should take a look at how other types of professionals in their organisation are developed and recognised professionally, even whilst being paid less.
Here are some of the things young professionals in accountancy, HR, procurement and marketing can expect from work:
Recognition of commercial competence through professional accreditation and qualification. This leads them to return to work post experience and travel.
- Purpose through professionalism
- Coaching for self-development against a framework of success and competence.
- Management support in their development journey.
By comparison, salespeople start their careers with no road map of development and qualification, and no external ratification of their knowledge, skill or behaviour.
True, not every seller wants or thinks about personal development, but with life expectancy rising and financial security less certain, the average career will be diverse and long.
Average working lives are 40 years, while the average tenure in a sales role is only 2.7 years, based on LinkedIn data. And it’s shorter for younger sellers. If you then weave in some extended holidays and travel, the average future seller could have up to 15 employers in their working life. Most young sellers do not want this to be a rootless and aimless shuttling from employer to employer, with no sense of progress.
When salespeople look at their peers in finance and accounting, procurement, marketing, engineering and technology, they see that their companies invest in their personal brand, through professional qualifications layered over academic qualifications. Why then would they choose selling as a career? They may fall into the role, but many will then seek to escape it quickly.
But imagine a world where sellers were monitored and coached to become better at their jobs. Imagine they were recognised and rewarded for knowledge, skill and behaviour as well as for hitting their number.
As a sales leader, imagine that your sellers were content to take a longer term view and stay with you as an employer for longer. Imagine you enabled your sellers to embrace a long career where they were rewarded because of their capability as well as their results.
Would they join you ahead of another, more traditional sales employer? Yes. Would they stay longer with you and build deeper and stronger relations with customers? Yes. Would they be more likely to return after having a travel break? Yes. How would that reduce your cost of sale and increase your revenues? I think you know the answer to that.
By offering salespeople recognition via qualification, and by supporting their self development, you treat them as integral to your business, connecting you to your most important resource, your customer. You offer salespeople purpose through professionalism, and show them what that means in terms of customer connection. You offer them purpose through collaboration for customer revenue success.
The idea that all sellers care about is money, is being shown up for the myth it always was. Sellers are not “dogs in the yard”, penned in by a fence to ensure they stay within the boundaries that you seek. By removing their creativity, trapping them in very specific measures of success, manipulating their earnings to fit corporate returns, you are driving the best and brightest young talent away.
Covid-19 has many downsides, but one good thing it has done is to offer us an opportunity to change. Sellers are working from home. Technology makes it much easier for sales managers to listen in on sales calls, monitor progress towards behavioural goals, to offer coaching and support. Upheaval has fuelled a thirst for new knowledge and understanding.
Out of our new working patterns - now likely to remain with us for many months - we have the possibility to change the way we manage and reward salespeople, for the better.
So we have a choice as sales leaders in how we progress.
Option one is to do what we have always done. Option two is to start rewarding and motivating our young sellers in a way that may be different for sales, but is very established for other employees.
Which way will you go?